Exploring residential opportunities in Southern Luzon
At Colliers Philippines, we have seen how the pandemic raised the demand for horizontal residential projects. These cover house and lot as well as lot only developments outside Metro Manila. A quick check reveals that horizontal projects in key urban areas in central and southern Luzon are between 70 to 90 percent sold as of end 2020, with a huge chunk of demand coming from end-users especially Filipinos working abroad.
Over the past few years, we have seen developers aggressively implementing strategic landbanking in Southern Luzon. They are now reaping the fruits of these investments as the demand for horizontal projects has increased as people look for bigger lot sizes in areas outside the capital region. Despite the distance from Metro Manila, these developments remain attractive to end-users and local investors due to improved connectivity provided by public infrastructure projects.
In our view Southern Luzon, which covers Cavite, Laguna, Batangas, including Tagaytay, will remain a major economic corridor and a key source of Filipinos being deployed abroad. These factors should sustain the region’s viability for residential investments in the near to medium term.
Aside from thriving industrial activities and the lure of improved infrastructure connectivity in Southern Luzon, Colliers believes that sustained regional economic growth and continued overseas worker remittances should further propel residential demand in this region. This is a major reason why areas such as Tagaytay have also become popular residential investment destinations in this part of Luzon.
Robust regional growth
Southern Luzon’s economy has been expanding by about 6.6 percent a year from 2016 to 2019—making it one of the fastest growing regions in the Philippines. This is primarily driven by industrial activities, which account for 54 percent of the region’s annual economic output. While industrial parks here benefit from robust manufacturing activities, another segment that captures the region’s economic gains is the property sector.
This is evident in the number of project launches and take-up in the CALABA corridor. Colliers believes that sustained regional economic growth should further drive demand for properties in the area.
OFW remittances propel demand
Government data showed that Southern Luzon remains a major source of overseas Filipino workers (OFWs). The region accounted for 18 percent of total OFWs as of 2018. This makes the corridor highly feasible for residential projects (house and lot or condominium units) that cater to the end-user market. This explains why several horizontal projects in the corridor posted take up rates of between 95 percent and 100 percent despite being launched only in 2017.
Infrastructure bridges supply and demand
Several infrastructure projects are on the pipeline and we see these further unlocking industrial and residential values in Southern Luzon. These include the Cavite-Laguna Expressway (Calax).
According to the Department of Public Works and Highways (DPWH), the road project is likely to ease congestion in Cavite and Laguna and provide efficient transport facilities to industrial areas in the two provinces. The project also aims to reduce travel time from Cavite Expressway (Cavitex) to South Luzon Expressway (SLEx) by about 45 minutes.
Another major road project in Metro Manila that is seen to benefit Laguna and nearby areas in Southern Luzon is the NLEx-SLEx Connector Road, which aims to reduce travel time between the two expressways to just 20 minutes. It is due to be completed in 2021. The project is also likely to reduce travel time between two major industrial hubs—the CALABA region in Southern Luzon and Clark, Pampanga, in Northern Luzon. Once completed, we see the project stoking demand for industrial space and residential projects in both CALABA and Pampanga.
The construction of the Southern Luzon line (PNR Batangas City Station) of the North-South railway project and the planned revival of a rail cargo line from Manila to Laguna should play a vital role in funneling major manufacturing investments to the CALABA region. Other crucial projects include Tagaytay Bypass road and Cavite-Tagaytay-Batangas Expressway.
As the demand for lot only projects grows, we see more developers cashing in on this opportunity. Hence, we expect more horizontal project launches in the CALABA region including Tagaytay in the near to medium term.
